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Investigating Investment P riorities for Biofuel P roduction and the Influence of Regulations , Policies , and Emergent C onditions. Prepared for SEDC 2014 April 3-5, 2014 Chantilly, VA Elizabeth B. Connelly 1 , Lisa C . Peterson 2 , Andres F. Clarens 2 , and James H. Lambert 1

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Prepared for SEDC 2014 April 3-5, 2014 Chantilly, VA

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Prepared for sedc 2014 april 3 5 2014 chantilly va

Investigating Investment Priorities for Biofuel Production and the Influence of Regulations, Policies, and Emergent Conditions

Prepared for

SEDC 2014

April 3-5, 2014

Chantilly, VA

Elizabeth B. Connelly1, Lisa C. Peterson2, Andres F. Clarens2, and James H. Lambert1

1Systems and Information Engineering, University of Virginia

2Civil and Environmental Engineering, University of Virginia


Agenda

Agenda

  • Background & Motivation

  • Methods

  • Application

  • Results

  • Conclusions


Background motivation

Background & Motivation


Background

Background

Commercial Aviation Alternative Fuels

Initiative (CAAFI)

  • Formed in 2006 to promote the development of alternative jet fuel

  • Coalition of airlines, aircraft and engine manufacturers, energy producers, researchers, international participants and U.S. government agencies


Background cont

Background (cont.)

Major concerns regarding aviation fuel:

  • Supply security

  • Affordability and price stability

  • Environmental impacts

    • Reduce GHG emissions

    • Avoid carbon tax


Background cont1

Background (cont.)

Meets “do no harm” ground rules (Hendricks et al., 2011):

  • Does not compete with arable land food or feed production

  • Does not require freshwater resources

  • Does not cause deforestation or adverse social or environmental harm

  • Can be scaled to assure secure sustainable sufficient supply

  • Can be competitive with JP-8 or JetA-1

  • Life cycle carbon reduction, >50% fossil CO2 reduction


Motivation

Motivation

“Biofuels lifecycle and sustainability research will provide better information to decision makers on the trade-offs and opportunitiesassociated with increased biofuels production.”

-- Lisa Jackson

EPA Administrator (2009)


Motivation cont

Motivation (cont.)

“The fundamental challenge facing the renewable jet fuel industry today is that there are simply no commercial quantities of renewable jet fuel available anywhere in the world…Because there is insufficient feedstock combined with an inadequate supply chain infrastructure”

-- Dr. ChristophWeber

CEO of JATRO


Biojet fuel supply chain

Biojet Fuel Supply Chain


Feedstocks

Feedstocks

Algae

Agricultural Residues

Energy Crops

Municipal Solid Waste

Forest Residues


Conversion pathways

Conversion Pathways


Investment considerations

Investment Considerations

  • Feedstock availability and productivity

  • Biorefinery location

  • Processing technology tradeoffs

  • Overall economic feasibility


Methods

Methods


Methodology background

Methodology Background

Montibeller and Franco (2010) on MCDA aiding strategic decisions

  • Addresses cognitive burden associated with evaluating a large set of interconnected strategic decisions


Methodology background cont

Methodology Background (cont.)

Goodwin & Wright (2001) on scenario analysis

  • Addresses uncertainty yet avoids estimating subjective probabilities

  • Story telling via scenario planning is attractive to managers

  • Incorporates a variety of viewpoints about the future


Methodology background cont1

Methodology Background (cont.)

Belton and Stewart (2002) suggest integrating scenario analysis and MCDA

  • Biases from the heuristics employed by unaided decision makers are likely to be avoided

  • Transparency and flexibility can maximize the participation of decision makers from diverse backgrounds and encourage new perspectives

  • Formal decision process creates documented and defensible rationale for choosing a particular strategy


Prepared for sedc 2014 april 3 5 2014 chantilly va

Methodology Background (cont.)

Risk has been defined as…

The measure of the probability and severity of adverse effects.

W.W. Lowrance, On Acceptable Risk (1976)

The effect of uncertainty on objectives.

ISO 31000 (2009)

The influence of scenarios on priorities.

Lambert et al. (2013, 2012, 2011)


Methodology background cont2

Methodology Background (cont.)

Applications of integrated scenario analysis and multicriteria analysis:

  • Coastal infrastructure in Alaska (Karvetski et al., 2011a)

  • Electricity capacity expansion (Martinez et al., 2011)

  • Energy security in military installations (Karvetski et al., 2011b)

  • Transportation infrastructure assets (Thekdi and Lambert, 2013; Lambert et al., 2012; Schroeder & Lambert, 2011)

  • Facility energy investments (Karvetski & Lambert, 2012)

  • Radiological disaster preparedness (Parlak et al., 2012)

  • Business processes for a risk organization (Tenget al., 2012)


Methods1

Methods

  • Decision aiding techniques

    • Multi-criteria decision analysis

    • Scenario planning

  • Objectives:

    • Develop criteria, initiatives, and scenarios of importance for developing a biojet fuel industry

    • Determine weights for importance

    • Use value function to rank the initiatives for each scenario

    • Determine which scenarios influence the prioritization of initiatives


Methods cont

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative influence of criteria

Identify criteria for decision-making

Assign relative influence of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios


Methods cont1

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative influence of criteria

  • Sc= {c1,…, cm} represents the m criteria used for decision making

  • Sx= {x1,…, xn} represents the n investment alternatives being considered

  • Sec= {ec1,…,ecp} represents the p emergent conditions that are used for scenario building

  • Ss= {s1,…,sq} represents the q scenarios that address future uncertainties

Identify criteria for decision-making

Assign relative influence of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios


Methods cont2

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative influence of criteria

Weight each criterion in terms of influence for the as-planned scenario

Normalize the weights: wi0’=wi0 /Σwi0

Identify criteria for decision-making

Assign relative influence of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios


Methods cont3

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative influence of criteria

Define matrix A that contains scores xij indicating how well each initiative xi addresses each criterion cj

Identify criteria for decision-making

Assign relative influence of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios

x1,1⋯ x1,n

⋮ ⋱ ⋮

xm,1 ⋯ xm,n

A =

0 if initiative idoes not address criterion j

0.33 if initiative isomewhat addresses criterion j

0.67 if initiative iaddressescriterion j

1 if initiative istrongly addresses criterion j

xij=


Methods cont4

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative importance of criteria

Reassess the relative influence of criteria under each scenario

Identify criteria for decision-making

Assign relative importance of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios

9 × wi0’ if the influence of criterion iincreases with scenario k

3 × wi0’ if the influence of criterion iincreases somewhat with scenario k

1 × wi0’ if the influence of criterion istays the same with scenario k

1/3 × wi0’ if the influence of criterion idecreases somewhat with scenario k

1/9 × wi0’ if the influence of criterion idecreases with scenario k

wik =


Methods cont5

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative importance of criteria

Determine the rank order of initiatives using the value function v(xi) defined for each scenario sk where v(xi)k ∈[0,100]:

v(xi)k = 100 x Σi=1,mwikxij= 100 x w1k ⋯ wmk

Identify criteria for decision-making

Assign relative importance of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios

x1,i

xm,i


Methods cont6

Identify emergent conditions

Define scenarios as combination of conditions

Methods (cont.)

Identify investment initiatives

Reassess relative importance of criteria

  • For each initiative, calculate the absolute value of the change in rank for each scenario compared to the baseline

  • Influential scenarios are characterized by:

    • Comparatively high average changes in rank

    • Most extreme changes in rank (positive or negative)

Identify criteria for decision-making

Assign relative importance of criteria

Assess how well initiatives address criteria

Determine rank order of initiatives

Determine influential scenarios


Application

Application


Criteria

Criteria


Initiatives

Initiatives

Initiatives span biojet fuel supply chain


Emergent conditions

Emergent Conditions

Identify emergent conditions addressing:

(1) markets, (2) policies,

(3) technologies


Scenarios

Define scenarios as combinations of conditions

Scenarios


Prepared for sedc 2014 april 3 5 2014 chantilly va

Assessment of initiatives


Weighting criteria under scenarios

Weighting criteria under scenarios

Reassess relative influence of criteria

Relative influence of criteria equal in baseline scenario

wi’= α xwi


Results

Results


Influential scenarios

Influential Scenarios


Conclusions

Conclusions


Accomplishments

Accomplishments

  • Identified criteria by which stakeholders in the Commonwealth of Virginia can evaluate actions, decisions, and other initiatives to develop a regional biojet fuel industry

  • Identified thirty-seven initiatives for building a biojet fuel industry, considering six stages of the supply chain

  • Identified twenty-five emergent conditions of importance to farmers, fuel producers, airlines, airports, and travelers, among others

  • Constructed five future scenarios of concern to these stakeholders


Accomplishments cont

Accomplishments (cont.)

  • Tested the priorities for the biofuel initiatives with scenario-based preferences for the five scenarios that are combinations of the emergent conditions

  • Identified of impactful scenarios for establishing a biofuel industry

  • Provided decision support for the DOAV and other stakeholders to preserve aviation operations in response to scenarios of emergent future conditions


Acknowledgments

Acknowledgments

This material is based upon work supported by the National Science Foundation under Grant No. CBET – 1067563.

This material is also based upon a project supported jointly by the Virginia Department of Aviation and the Virginia Center for Transportation Innovation and Research.

Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation, the Virginia Department of Aviation, or the Virginia Center

for Transportation Innovation & Research.


Questions

Contact information:

Elizabeth Connelly

[email protected]

https://www.linkedin.com/in/elizabethconnelly

Questions?


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